Alzheimer's drug holds key to Elan, Wyeth shares
By Ben Hirschler
LONDON, June 11 (Reuters) - Hopes are mounting for an experimental Alzheimer's drug from Elan and Wyeth but the nature of the tests means clinical data due this month may provide little clarity on its sales potential.
The Phase II update on antibody medicine bapineuzumab is perhaps the year's most keenly awaited biotech trial result and speculation ahead of the expected news has lifted Elan shares over the last two trading sessions.
The two partners have already launched a big final Phase III study, in the belief that they may have the world's first drug that can modify the course of Alzheimer's, the most common cause of dementia, rather than just relieving its symptoms.
The drug aims to fight deposits called beta amyloid plaques, which are linked to the degenerative brain condition.
If it works, Irish drugmaker Elan and its U.S. partner Wyeth will have a multibillion-dollar seller on their hands. Some bullish analysts predict eventual annual sales of $13 billion, which would make bapineuzumab the biggest drug ever.
It is not the only game in town, however. Eli Lilly and Myriad Genetics, among others, also have rival drugs in development.
Given the world's ageing population and the clear unmet need for an effective treatment, research firm Decision Resources thinks the Alzheimer's drug market could triple in size to nearly $9 billion by 2017.
And it sees most of that growth coming from bapineuzumab and Lilly's product LY-2062430, according to a report this week.
DEVIL IN THE DETAIL
A spokesman for Wyeth confirmed it expected to release headline Phase II study results by late June, with a full presentation at the International Conference on Alzheimer's Disease in Chicago July 26-31.
But interpreting the information will be a challenge for both analysts and investors, since the 240-patient study is essentially four separate studies, each involving just 30 patients given either a dose of active drug or placebo at random.
Its statistical power is therefore low.
Brian McCarthy of Merriman Curhan Ford, who rates Elan "buy", thinks the study is unlikely to reach statistical significance but he expects to see a positive trend.
Many analysts share that hope -- but the devil will be in the detail and investors need to buckle up for a bumpy ride.
Ian Hunter of Goodbody Stockbrokers believes the range of possible scenarios from the trial results could leave Elan shares worth anything from $12.53 to $37.43, against a current price in New York of around $26.50.
Veteran biotech analyst Karl Keegan at Cannacord Adams, who rates Elan a "sell", also sees market turbulence but is cautious about bapineuzumab prospects, predicting sales of a more modest $4 billion, if it is eventually approved by regulators.
"The (Phase II) data should provide quite a bit of volatility in trade but I think that people have over-estimated the impact of the top-line data. I don't think it will tell us that much," he said.
Elan has been heavily shorted by some players, adding to potential volatility. Shorting involves borrowing stock to sell it, with the aim of buying it back more cheaply at a later date.
Wyeth, a much larger company, is less geared to the data but the drug is still a pivotal swing factor for its stock too.
The big losers from progress with bapineuzumab or rival new treatments are likely to be the existing acetylcholinesterase inhibitor drugs that currently dominate the Alzheimer's market.
Sales of such drugs, which include Eisai and Pfizer's market-leader Aricept, could drop by nearly half by 2017, Decision Resources said.
Acetylcholinesterase inhibitors can help but not cure some Alzheimer's.
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